Zerodha co-founder Nikhil Kamath, who is also the founder of True Beacon – an alternative asset manager – has announced his foray into wealth management. True Beacon will offer Portfolio Management Services (PMS) targeting high net worth households. True Beacon has been offering alternative investment products since 2019 and Kamath has a client base of 300 apart from its substantial base of contacts amongst India’s wealthy. The company has assets under management 1,500 crores. Alternative Investment Funds (AIFs) have a minimum ticket size 1 crore per customer. True Beacon is targeting assets under management (AUM) of wealth 750 crores in its first year of operation. While the firm plans to offer all types of PMS services, its focus will be on discretionary PMS.
“Wealthy households do not have the time to approve every transaction and micromanage their portfolios. Therefore, our focus will be on discretionary PMS,” said Richard Petal, co-founder and CEO of True Beacon.
Kotak Mahindra Bank will be the custodian of PMS and will provide accounting and reporting services.
“The use of derivatives will be a major difference. For example, we will use derivatives to provide customers with access to commodities, rather than opting for commodity stocks. Another unique selling point is the fact that government bonds will feature prominently in our offering. We will also have the lowest cost/fee structure in the industry. Nikhil Kamath, Co-Founder, True Beacon, said, “We will also have a dashboard that will provide daily NAV as opposed to periodic reports provided by existing PMS managers.
True Beacon will focus on households with net investable assets of . More than 10 crores as per the panel.
He added that True Beacon will also offer global stocks to its customers in the future. It plans to provide a portal that allows customers to network with each other, a feature currently available to customers of its True Beacon One AIF.
Kamath launched True Beacon One in 2019, a Category III AIF (which can take long and short positions). They followed it up with AIF True Beacon Global, operating out of GIFT City, focused on non-resident Indians and foreigners in May 2021. As an investment manager, Kamath has followed a conservative path after enjoying strong returns in 2019 and 2020.
Over the past year, True Beacon One has hedged approximately 50% of the fund’s portfolio. True Beacon One has delivered 20.67% CAGR since its launch. However, its conservative stance ate into returns in FY2021-22. These are at 3.9% compared to Nifty’s 19% in FY22. Kamath is still going through a bearish phase and says he is in no hurry to lift the hedges in the near future.